Its workforce. Zurich insurance net profit falls nearly 30 , hit by weatherrelated claims in the u. S. And europe. This as lower Interest Rates weigh on investments. Welcome to the show, everyone. Lets get back to one of our top stories this morning. Hundreds have been left dead and thousands injured after Security Forces broke up camps supporting the former president mohamed morsi. Interim Vice President and leading liberal voice in the country Mohamed Elbaradei resigned over the use of force. Yousuf is in cairo. What is the latest on the ground . There is a relative return to calm in this part of cairo, but, of course, the country as a whole is in a state of emergency after clashes yesterday between supporters of the ousted president and Security Forces. The government taking a decision to disperse these two protest sites, which have been holding out there for some six weeks. The diplomatic efforts didnt work and now they made a decision, they said they had no other choice. The Prime Minister in a speech to citizens yesterday said that basically he could not let the situation go on further, and no state that respected itself would do what is being done now. Also, the latest death toll, carolin, we have, 326 people have been killed and over 2,900 injured. Thats according to the ministry of health. The Muslim Brotherhood on the other hand claims the figure is much, much higher. Now, the clashes were very, very violent, some very distressing images and another step up in perhaps a ladder of violence, raising the prospect of prolonged conflict in this country. The clashes were not just happening in cairo. They were happening across the country, in suez, islamiyah, in alexandria as well. The response from supporters of the ousted president in skirmishes across egypt, they fired on churches. They stormed police stations and buildings. Ministry of interior says 43 people have been killed in the fighting, but he praised the officers for the work they did. They were able to secure and confiscate weaponry at protest sites. But the Muslim Brotherhood is not giving up. Theyre saying they will fight this military coup, this massacre as they describe it. And they have called on egyptians to rise up, which tells you a little bit about where this could lead in the coming hours and in the coming days. The International Condemnation is clear. We have turkey, the turkish Prime Minister calling for an emergency meeting of the security council. And u. S. Secretary of state john kerry as well calling it deplorable what happened here in cairo. But the resignation of the interim Prime Minister as you pointed out is a step back for this government, and could signal a rift in the cabinet. And that has serious implications down the road. Yousuf, obviously it is extremely difficult to forecast what is going to be happening in the country and on the ground. But do you feel based on what youre hearing from people on the ground that this is something that could be blowing over pretty quickly or are we heading into a syrialike civil war situation, which could be dragging on for years and years . Well, carolin, the reality of the matter is that the two parties have moved much further apart now. The violence that has killed so many people and i told you the numbers, that doesnt bring people closer together and let alone anywhere near a negotiating table. It will push the Muslim Brotherhood to look at more serious methods to get their message across. That is the worry. You also have to keep in mind that in the past two years, the Muslim Brotherhood has been able to build itself up as a serious force. The weapons that the ministry of interior claims to have found in the two camps is evidence to that. The libyan border is porous, a lot of weapons are in this country. The ministry of interior made that clear himself during a press conference. He said we may have gotten all these weapons now, but there are many more still out there and that, of course, means there is a lot more work to do to not only get security back to this country, but also to get the political reconciliation process in any direction. Yousuf, thank you for that. I want to take a quick check of where oil prices are heading. Brent crude is higher to the tune of. 6 , just above the 110 handle. Light crude at 107. 30, up by. 4 . Egypt, of course, is not a major oil producer, but it is home to the suez canal, which is very important gateway for oil and bigger commodities, exports and trading. St. Louis fed president James Bullard says the fed needs more evidence the economy is improving. And inflation is heading higher before they decide to taper their massive bond buying program. Bullard is a voter on the fomc this year. He says the fed chairman should hold a press conference after every policy meeting instead of quarterly to prevent decisions from being held up or brought forward to coincide with that precedent. Dan scott is head of research at Credit Suisse. Dan, always great to see you. Youre looking very tan this morning. You must have been on holidays. Yeah, you bet. It is Summer Holidays here. Were seeing it a little on volumes, perhaps on volatility and the effect on thank you. Good to see you. We know that tapering is coming, whether it is september or december. Do we really care . Have the markets adequately priced in the fact that tapering is coming or once we do get hit by it, are we going to be seeing another huge vat of volatility . Yeah, thats really the question. Because i think any rational investor would have to take a step back and think that tapering is a good sign. Tapering only comes when we have concrete signs that there is an improvement in the economy that the economy can stand on its own legs and so if the fed comes forward and decides it is ready for tapering, that must be a good sign, must mean they have enough evidence to be able to release the economy and let it run on its own. The thing, however, is when we first heard the initial balloon being floated by the fed, that they were considering easing, markets sold off, because the markets were of the opinion that the economy is not ready. Thats a few months back. I think the data that we have seen recently, globally, not just in the u. S. , has been constructive. A lot of the concerns have started to ease european economy has come out of recession, and so markets are a little bit more at ease. So the reaction to these statements may be not quite as strong. Reaction to the markets overnight, though, still there, around 4 00 a. M. , saw a little bit of activity there after we saw bullards statements. Not that i was up in the middle of the night, but i checked this morning, and that goes to show that markets still are a little bit sensitive about timing of tapering, and what that means for commodities, what it means for the dollar what it means for Financial Markets in general. Dan, what do you do with u. S. Stocks now . The s p 500 has rallied by some 18 year to date. It seems as though with are definitely ripe for a correction. I cant see what could be taking these markets even higher from here. As a house we agree with you. Our house view on equities is mutual at the moment. Were constructive longer term on equities and the equities space. We really think that everything is there. But markets have rallied quite a lot and so overall we are neutral on equities. Having said that, however, within that neutral waiting from our country perspective, we do like the u. S. , we also like japan and we also remain over at germany. We think Japanese Equities have further room to rise higher, but say in terms of portfolio contexts and portfolio waiting, we remain neutral. Lets stick with japan. Japans finance minister is downplaying reports the government plans to cut Corporate Taxes. He also said a Corporate Tax cut wouldnt help the economy since most businesses in japan dont pay Corporate Taxes. Aso said cutting Corporate Taxes and research should be a priority. The yen traded slightly higher against the dollar today after his comments. So, dan, you come out with a fairly comprehensive note on Japanese Companies. Youve got walk us through some of the top picks and tell us why youre putting the focus on exporting stocks. Well, i mean, basically we feel that abe will have success longer term, able to push the yen lower. After we initiated the trade, it was higher than it is now. We feel that a number of companies are going to benefit from that. So what we did is we ran a Sensitivity Analysis on companies, share prices, reacting to a declining yen. And then also adding an overlay on trying to see which companies have hedges in place and what their positioning is to currency movement. We have come up in the end with a blended quantitative Qualitative Analysis on Japanese Companies that benefit most from a weakening yen. We think there is further downside on the yen and upside on equities. Given that point of departure, we have put together this list of companies we think are going to benefit most from those drivers, weakening yen and equities in japan continuing higher. Sony is one of the companies we like a lot. And there are also some other perhaps the companies you wouldnt necessarily traditionally see as exporters, but companies that face good prospects to a weakening yen. Some also in the financial space, for example. So the Holding Company that ran the 7eleven franchise. A number of companies that we think will be big beneficiaries of what is to come. Toyota and sony increased their guidance for the year. Dan, thank you for that. Stay with us. Dan scott at Credit Suisse. And lets check in on how markets are trading. Li sixuan, lots of red arrows today. Following wall streets weakness overnight, asian markets also under pressure today. Japan saw profit taking after the finance ministers comments. The nikkei 225 finished lower but over 2 . The shanghai composite pulled back nearly 1 despite the pbocs fund injection. Beijings antitrust probes took a toll on pharmaceutical and auto counters. Hong kong came back from yesterdays typhoon break ending on the flat line. In australia, finishing marginally in the red. A stronger yen weighed on japanese exporter stocks. Panasonic shares lower by over 3 today. Meanwhile, top gainers from yesterday such as financials and real estate stocks become underperformers on todays session on some profit taking. Nomura holdings down 2. 6 and Sumitomo Realty and development shed 3 . Look at earnings news in hong kong. China mobile turned in its report card earlier today. First half profit climbed slightly better than expected 1. 5 as fierce Market Competition persists. And shares added a modest. 2 . In a much stronger showing for another blue chip stock, le fung, they reported a 70 drop in net profit yesterday, it said the worst is already over and is on track for recovery this year. Shares soared almost 12 . Brilliance auto hitting an all time high. Shares jumped almost 7 . Back to you, carolin. Thank you so much for that. Time to look at what the currency markets are doing. The euro dollar is back below 133. Closer to that level yet again, up bit a third of 1 , getting a boost from the Second Quarter gdp numbers out of the eurozone yesterday. We talked about the dollar weakness against the yen just before on the back of comments from the finance minister who really poured cold water on talks we could be seeing a cut in the Corporate Tax rate. Dollar yen down by a third of 1 . The dollar weakness is a trend we have been seeing since yesterday because there is still more uncertainty around fed tapering and, of course, a little bit of caution ahead of a slew of Economic Data out from the u. S. Markets later on today. Sterling dollar sitting at 1. 5544. And continuing its gains against the dollar. Remember, we get uk retail sales for the month of july a little bit later on this morning. Now, this is the picture for the government bonds markets where we did see the tenyear treasury yields 2. 7 . This still is a twoyear high. Again, a little bit of caution ahead of the data later on today. And the gilts phase, this is a fascinating one currently, especially after the boe minutes yesterday, which were a little more hawkish than expected, but we did see that big decline in the claimant count. The tenyear gilt yield is at 2. 63 , still close to those twoyear highs. But i also want to show you what is happening in the short term space in terms of the twoyear gilt yield. It is now the highest since the month of june. That basically tells you that the market isnt believing what mark carney says about forward guidance. Look at this gilt yield at 0. 447 . The market is not believing what he says. It does believe that markets that raids in the short term will rise earlier than what mark carney is guiding for, maybe as early as 2015. Heres a quick check of the european markets, we are seeing a lot of red arrows across the board. The smi, bit of an underperformer on the back of weaker than expected numbers coming from zurich. The xetra dax losing a third of 1 . Similar story for the ftse 100, which has been relative underperformer yesterday on the back of the boe minutes. Now, ciscos Fourth Quarter profits and revenues grew, beating forecasts as demand for its networking products increased. However, the companys First Quarter revenue guidance is weaker than analysts expected. Ceo John Chambers says the Global Economy is, quote, challenging and inconsistent, noting continued caution in Southern Europe. Cisco is also cutting 4,000 jobs. Thats around 5 of its workforce. And cisco shares down in frankfurt, off by almost 9 . And it did fall some 10 in after hours trade. And as i said, lots of earnings out of switzerland this morning. Wholesome reported flat profit for the Second Quarter falling shy of forecasts for 429 million swiss franks. The cement giant said weakness in the india, canada and mexico markets weighed on the bottom line. We see wholesome shares despite that up by around. 1 . Zurich insurance big underperformer off by 3. 3 . Zurich insurance posted a steeper than expected 27 drop in Second Quarter net profit. The group did take a hit from tornado claims in the u. S. And flooding in europe. This is obviously something that also impacted some of the other insurers. And at first on cnbc interview earlier on, the groups ceo said that low Interest Rates also weighed on the groups investment. Continued low Interest Rates are also impacting our result. Investment income was down 8 compared to the prior quarter, which is a significant drop on the investment income, of course. Dan scott head of Venture Research at Credit Suisse is still with us. Dan, how concerned are you about numbers coming from we know the natural catastrophes had a big impact on the bottom line, but, you know, by and large, the market still loves the stock because of its Strong Capital levels and the fact it is paying a nice dividend. Would you agree with that . Well, our insurance analyst still has the company on hold. Numbers were overall disappointing. I think they would like to focus on weatherrelated losses. But really, in fact, thats the whole sectors. And what the market is unpleased about here on zurich is that the pnc unit didnt really live up to expectations. Shareholders equity also a little shy of expectations. I think thats what the Market Reaction is here to these numbers. Yeah. It looks like those key divisions, pnc disappointing is what the market isnt liking here. What about wholesome . We have seen this huge dichotomy between the emerging markets and the developed markets. It still is very cautious about what were seeing in europe in terms of the margin trends. But were also seeing weakness in india now. Is this just a oneoff, do you believe . Yeah, weakness in india is something i also picked up here on the numbers from wholesome. I think overall the results from wholesome were strong, though. They show really strict management of their cost base. Given that, overall profitability went up despite the fact that volumes went down, thats a good sign. Having said that, indian weakness is not a positive. And they try to balance that with comments about demand out of asia pacific being strong. So thats why you have this balanced Statement Today from wholesome and a pretty mixed reaction to the shares too. Okay. Dan, thank you so much for those comments. But you are still staying with us. Do go get a cup of coffee and well be back with you after the break. On todays show, find out why recent deals could trigger a domino effect in the European Telecom space. We get the m a stock pick 15 when we head to zurich after the break. Time to pass on the smoke. Weakness in europe as Sales Volumes drop for the third consecutive quarter. Well take a closer look at the Tobacco Industry at 10 30 cet. We continue our organized crime series with a special report on china as the country vows to clamp down on counterfeit products. Is t